InterContinental Hotel Profit Rises, Revpar Drops

InterContinental Hotels (IHG) announced a rise in pretax profits for 2019 from $482 million to $542 million on a year-to-year basis. Moreover, the net profit has increased from $349 million to $385 million on the back of the “successful execution of its strategy”.

The owner of Crowne Plaza and Holiday Inn brands also reported a revenue increase of 7%, from $4.34 billion to $4.63 billion. Finally, the company announced a 10% hike in final dividend, which is set at $125.8 cents.

Shares of the company opened 2.1% lower following the earnings announcement, before the bulls managed to erase losses and bring back the IHG stock to trade in green.

Despite the fact that IHG beat both profit and revenue estimates, one of the key metric components in the hotel industry - Revenue per available room (revpar) - dropped 1.8% in the fourth quarter to contribute to an overall decrease of 0.3% on a yearly basis.

The company cited unrest in the Middle East and weaker corporate demand in the UK as main reasons behind the slowdown. Although the revenue per available room fell 4.5% in Greater China, where the group operates 447 hotels in total, the impact of coronavirus is yet to be fully assessed.

Intercontinental Hotels is considered to be one of the five largest hotel groups in the world.